White Collar Crime
The Weekend Special
Bloomberg
Bethany McLean, who co-authored "The Smartest Guys in the Room" about Enron's demise, questions whether the punishments for white-collar crimes truly deter others. While the pursuit of justice after Enron's bankruptcy in 2001 was aggressive, with Enron's accounting firm being shut down and its former CEOs, Ken Lay and Jeff Skilling, receiving jail sentences, McLean wonders if these actions had the intended effect. The justification for prosecuting crimes includes retribution and deterrence, aiming to discourage potential wrongdoers. However, numerous financial scandals since Enron raise doubts about the effectiveness of prosecuting white-collar crime as a deterrent.
Despite increased focus and stricter laws to combat white-collar crime after financial crises, there's little empirical proof that aggressive prosecution deters others. A small study in Finland showed that prison reduced reoffending among white-collar criminals and had a limited deterrent effect on their colleagues. However, some experts believe longer sentences might be necessary, while others, like retired professor Georgie Ann Weatherby, are skeptical that heftier sentences will make a significant difference beyond removing the criminal from reoffending. Even extreme punishments, like the death penalty in China, haven't proven to be a larger deterrent.
McLean suggests exploring alternative approaches to punishment for white-collar criminals. Instead of solely relying on jail time, she proposes allowing them to use their skills to benefit society, such as creating jobs, teaching business skills, or serving in underprivileged areas. While acknowledging potential problems with this approach, she argues that it's worth considering as a better way to serve the communities they've harmed and prevent future wrongdoing, rather than simply locking them up. McLean concludes that the Enron scandal, despite its significance and the strong sentencing of its key figures, may have achieved very little in terms of deterring white-collar crime.
enjoy your weekend!!